On August 1, Year 1 Hernandez Company loaned $48,000 cash to Acosta Company. The one-year note carried
Fantastic news! We've Found the answer you've been seeking!
Question:
On August 1, Year 1 Hernandez Company loaned $48,000 cash to Acosta Company. The one-year note carried a 5% rate of interest. Which of the following shows how the accrual of interest revenue in Year 2 will effect Hernandez’s financial statements?
| Balance sheet | Income Statement | Statement of Cash Flows | |||||||||
| Assets | = | Liab. | + | Equity | Rev. | − | Exp. | = | Net Inc. | ||
| A. | 1,400 | = | NA | + | 1,400 | 1,400 | − | NA | = | 1,400 | NA |
| B. | 1,400 | = | NA | + | 1,400 | 1,400 | − | NA | = | 1,400 | 1,400 OA |
| C. | 1,000 | = | NA | + | 1,000 | 1,000 | − | NA | = | 1,000 | NA |
| D. | 1,000 | = | NA | + | 1,000 | 1,000 | − | NA | = | 1,000 | 2,400 OA |
Multiple Choice
-
Option A
-
Option B
-
Option C
-
Option D
Expert Answer:
The best option is B Five months of interest August 1 December 31 Year 1 will ... View the full answer
Related Book For 
Posted Date:
